Mikhail Shifman is the kind of professor universities fight over. His discoveries, research and teachings are key reasons the University of Minnesota's physics department is highly regarded.

So when Penn State tried to recruit him, the U countered with a bump in salary, a renovated office and $25,000 per year for five years to pay a research collaborator. In total, it was less than Penn State's offer, Shifman said, but the U won out.

Earning $220,204 in total salary, Shifman sits among the U's 200 best-paid employees and in the center of the growing debate over how colleges spend their money.

Investments in faculty, administrators and new buildings make a university's reputation and help attract top students, but also drive much of its cost. Now states are taking a harder look at whether those costs are justified. If provisions to a House higher education bill pass, Minnesota could join other states in tying their funding to limits on spending and tuition increases.

One target for some Minnesota lawmakers is the U's ambition to be one of the best research universities in the world.

"In order to get there, you have to have pretty high-level professors, pretty high-level facilities," said Sen. Claire Robling, R-Jordan, the ranking minority member of the higher education committee. "I've been concerned that those cost-drivers of getting to that goal have been more than our average students can absorb."

The public believes universities could cut back without hurting their quality, a national survey by nonprofit Public Agenda shows. Meanwhile, new studies of college spending are giving taxpayers details that allow them to challenge university priorities.

A ground-breaking analysis by the nonpartisan Delta Project on Postsecondary Education Costs, Productivity, and Accountability found the U's Twin Cities campus spends more per student -- $21,400 in 2006 -- than any other state's public research universities. While there are problems with that ranking -- the U's medical school is included while some other schools' are not -- the report invites questions from a public reeling from tuition increases.

"I don't see any state or federal government suddenly having the money to better fund colleges and universities," said Jane Wellman, executive director of the Delta Project, which conducted the study. "So we have to be prepared to talk about increasing productivity and using the money we have more efficiently."

The university has welcomed the conversation about costs, said U President Robert Bruininks. He points out that it has cut back by eliminating jobs, sharing big-ticket purchases with other Big 10 universities, freezing salaries, reorganizing schools and telling each department to find savings of 5 to 8 percent.

At the same time, university officials ask Minnesotans to recognize the expense of running a huge institution -- with a medical school, extension service and agricultural programs, among other things -- that competes with schools around the world for faculty. Each year, the U faces about $80 million in increasing expenses "to keep the lights on," said CFO Richard Pfutzenreuter. If you assume no increase in compensation -- a freeze the U is planning -- that still leaves $55 million in increased costs.

Ranked third in prof pay

Salaries and fringe benefits account for the majority of the university's $3 billion operating budget -- 63 percent in 2008-09 -- according to information the U submitted to the Legislature. Payroll expenses have increased 107.6 percent since 1994 while total U expenditures have risen 112.8 percent, U documents indicate.

The U paid its full professors an average salary of $127,400 in 2008, according to an annual survey released this month by the American Association of University Professors, and an average total compensation of $167,200 (not including the medical school). That makes its professors the third-best compensated in the Big 10 and fourth-best among what it considers its "comparative group," which includes schools such as the University of California, Berkeley.

In its effort to be among the top-three research universities, the U has focused on hiring superstar researchers who require "compensation, plus facilities, plus support staff, plus instruments," said professor Judith Martin, chair of the University Senate Finance and Planning Committee.

"This isn't a local market," Martin said. "Particularly in the sciences, it's an international market. That's not always well-understood by students and, from my perspective, the public. People think anybody could teach a class. Actually, that's not true."

The university won $675 million in grants and contracts in 2008 -- a $50 million increase over 2007, the second-highest increase among U.S. public universities in the past three years. Bruininks attributes that to the faculty. "They're the rainmakers here at the University of Minnesota," he told U regents recently.

Faculty at a research institution are expected to bring in grant funds, said Arlene Carney, vice provost for faculty and academic affairs. Those funds end up paying part of their salary and the salaries of graduate students.

Many grants require professors to spend a particular percentage of their time doing the research, meaning those professors spend less time in the classroom. About half of full-time faculty at U.S. public research universities taught less than four hours per week in 2003, the most recent year available, according to data from the National Center for Education Statistics. Just less than 6 percent taught 15 hours a week or more. Carney said the U's numbers are comparable.

Undergrads still benefit, Carney said, because star professors often work with them on research projects, advise them on emerging fields and attract high-caliber graduate students who teach courses. And they're in the classroom themselves more than you'd guess, Carney said.

"We have a very large number of just the top, top faculty who teach undergraduates happily and incredibly successfully every semester," Carney said.

Price war for professors

Recently, the U has faced "a real escalation" in competition to keep the star professors, said Provost Thomas Sullivan. "The reputation of a university rests on the reputation of its faculty," he said.

During the 2007-08 school year, the Twin Cities' faculty of about 2,300 received 111 offers from other universities that the U countered. The year before, there were fewer than 100. The counter-offers usually include a mix of "additional salary, additional lab space and greater support for graduate students," Sullivan said, and their cost is borne by individual colleges or departments.

University departments are now facing budget cuts that will "undoubtedly" affect their ability to keep faculty, said professor Allen Goldman, head of the School of Physics and Astronomy. Because of the university's hiring "pause," the physics department has filled just two of the six positions it had posted, he said, and is "substantially short" of its ideal size.

This semester, Shifman teaches a graduate-level course called "Introduction to Supersymmetry," covering material "at the very front line of research," he said. It's offered at a limited number of U.S. universities. Although six students registered, each lecture attracts at least a dozen; last week, one student drove in from Carleton College in Northfield.

Having renowned professors produces "a cascading effect," said Steve Crouch, dean of the Institute of Technology. "If the U gets top professors, they can compete for the top grants which gets the top graduate students," who teach top undergrads cutting-edge curriculum. Undergraduates also have some opportunity to work with those professors and graduate students on research, he said.

Affordability almost sent Maplewood resident Sam Lindberg to a community college, but the prestige of the U's research eventually won him over. The freshman works 15 hours a week and takes out loans to cover more than half his tuition. It's worth it, he said. Lindberg hopes to transfer his work study job from food service to research assistant in the physics department.

At the U, "you get to be involved with people who are more involved in the profession," he said.

The cost of administration

The driving force behind rising tuition is not too much spending on faculty, but too much elsewhere, recent reports say.

From 1987 to 2007, universities have hired managers and support staff more than they have faculty, according to a report released last week by the Center for College Affordability and Productivity. Those hires have also outpaced enrollment, the research shows.

University officials dispute those numbers, which rely on U.S. Department of Education data, because of the many inconsistencies in how colleges report information.

In newspaper editorial pages and at Capitol hearings, students, faculty and legislators have pushed for cuts to the University of Minnesota's central administration. The state House of Representatives' higher education omnibus bill includes a provision that would bar the U from using state funding to pay for new administrative positions or for administrators' salary increases.

"Once you start looking at the budget, there's a huge concentration of funds in areas that do not contribute at all to teaching, research or outreach," said Eva von Dassow, associate professor and director of undergraduate studies for the Department of Classical and Near Eastern Studies. "You could buy 10 faculty members for the price of the provost," she said.

Dassow and other critics point to a budget summary that shows "institutional support" costs rising from $179 million in 2004-05 to $322 million budgeted for 2008-09.

But that summary uses budgeted, rather than actual, expenditures and "institutional support" also includes other expenses, including $60 million spent over four years on a new financial reporting system, Pfutzenreuter said. "That doesn't prove we've got more pointy-headed administrators running around," he said.

In 2000, the U system employed 58 senior administrators (senior, assistant, associate and regular vice presidents, provosts, deans and chancellors). By 2008, that number had grown to 70 -- an increase of 20.7 percent. The number of deans is the same today as it was in 2000 -- 26. The biggest increase came in the category of senior and executive vice presidents and provosts -- from eight in 2000 to 13 this year.

The increase in these administrators mirrors the increase in the number of degrees awarded over that time, said Carol Carrier, vice president for human resources. Included is the chancellor for the new Rochester campus, as well as people who handle increasing regulations and new technology.

"At any university, administrators are probably a pretty typical target," she said, "but obviously programs grow and management is needed to take care of those programs."

Late last year, Bruininks froze the salaries of about 40 top administrative employees, including himself, and has cut back other administrators with the reorganization of the Graduate School and the Academic Health Center.

Big bills for brick and mortar

Buildings are the most visible targets of cost-cutting advocates.

At the start of this semester, the University of Minnesota gave some students the chance, via video, to ask questions of Bruininks.

"I would just like to know," said one woman, "how the university is justifying all its increased spending, especially on things a lot of people would think are kind of extravagant -- the new history museum, the TCF Bank Stadium -- especially in an economic climate that I think most Americans would agree that spending beyond our means has caused."

The U is in the midst of a building boom. Over the next five to 10 years, it plans to build, renovate or add to the following: the TCF Bank Stadium, the Center for Magnetic Resonance Research, three new biomedical labs, the Weisman Art Museum, Northrop Auditorium, the Science Teaching and Student Services Center (which will replace the Science Classroom building), the Recreation Center, a new physics and nanotechnology facility and the Bell Museum of Natural History. The Legislature continues to debate whether to help fund the Bell Museum and will consider the physics and nanotechnology building within the next few years.

Together, the projects add up to more than $750 million, said Orlyn Miller, the U's director of project management, paid for through a mix of public dollars and private donations.

In recent years, public and private colleges alike have built high-tech science buildings, new dorms and multi-million athletic complexes -- in part because surveys show those things matter to coveted students and faculty.

"We've been operating in what you might call a seller's market," said Patrick Callan, founding president of the National Center for Public Policy and Higher Education. "There hasn't been a lot of incentive to find cost-effective approaches. In fact, the incentive has been to become more expensive."